Blunkett promises to sell disputed shares

The work and pensions secretary, David Blunkett, last night moved to end controversy over his £15,000 investment in a DNA testing company by announcing that he will "dispose of the shares" rather than face Conservative accusations that he has blundered into a conflict of interest.

Complaining of media intrusion in his private life and of "misrepresentation", Mr Blunkett denied approaching any Whitehall ministry on behalf of DNA Bioscience, the small private firm whose board he joined for a fortnight in April, when he was a backbencher.

"Nor have I provided any advice to the company. There has therefore been no conflict of interest," the minister said in a statement that followed a day of intense media speculation that he might be forced to resign, as some Tories are demanding.

"However, I am not prepared even to have the appearance that there could be any potential future conflict whilst the trust retains any shares in DNA Bioscience. I have therefore asked my sons to authorise the trustees [appointed after he returned to office] to dispose of the shares. They have agreed," he said.

Tony Blair, who has tried to protect a loyal minister whom he has trusted with important welfare reforms this month, said "no further action is needed and the matter is closed".

That was rejected by Chris Grayling, shadow leader of the Commons, who said that Mr Blunkett broke ministerial guidelines in his handling of the shares. The Liberal Democrats and large sections of the media shared that judgment. The emergence of details last night of letters from Lord Mayhew, chairman of the Commons advisory committee, to Mr Blunkett about his requirements as a then-former minister may increase the pressure on the pensions secretary.

Declaring that last night's share sale amounts to an admission of error by Mr Blunkett, Mr Grayling demanded that the cabinet secretary, Sir Gus O'Donnell, stage an inquiry. "Tony Blair has been adamant that ministers should work to the letter and the spirit of that code. Is he now saying that Mr Blunkett should be an exception to this rule?" the MP asked.

It was not immediately clear who would buy the shares, and whether Mr Blunkett would get his investment back, let alone a penny of the "£500,000 profit" some newspapers claimed he would get if and when DNA Bioscience was floated as a public company. Aides were adamant that he will "not make a profit", but they could not provide details.

Mr Blunkett made the investment in the belief that he could recoup some of his "mega" legal bills - the price of his paternity and access battle with Kimberly Quinn, the mother of his young son.

He believes bad publicity had already damaged that prospect. His allies say that he told his permanent secretary at the Department for Work and Pensions of his shares and logged them with the register of MPs' interests. His mistake, he admits, was not to consult the anti-sleaze advisory committee on business interests, because he thought it "voluntary".

With Labour MPs and ministers divided, Mr Blunkett is not out of the woods yet. Some dismiss him as an increasingly arrogant Blairite loner, who has made a series of poor judgments. Others sympathise with his personal troubles. Many ministers, including Lord Heseltine, Geoffrey Robinson and Lord Sainsbury, have had family trusts in office.

Words of warning

Letters from Lord Mayhew to David Blunkett

December 21

First letter, sent on December 21, shortly after Mr Blunkett quit the cabinet, was routine, reminding now-former minister that ministerial code said ministers should seek committee's advice on appointments.

March 2

Second letter after appointment to Indepen lobbying firm referred to in press. Lord Mayhew told Mr Blunkett he had raised it wondering whether Mr Blunkett thought recording it in the register of members' interests constituted approval by his committee. That was not so, and he told Mr Blunkett normally a minister would wait for three months.

March 15

Final letter was on March 15, after Mr Blunkett had apologised for not informing him about appointment. Lord Mayhew told him the apology was not necessary, because it was voluntary whether former ministers took advice offered. Lord Mayhew again spelt out that code required ex-ministers to consult committee.

From Sir Gus O'Donnell

October 31

"Section 5.29 of the ministerial code states that former ministers should seek advice from the independent Advisory Committee on Business Appointments about any appointments they wish to take up within two years of leaving office ...

"Having received advice of the advisory committee, it is for former minister to decide whether or not to accept it - and it is this part of the process as recommended by the Nolan committee, which is voluntary and advisory. If a former minister decides to take up an outside appointment against the advice of the advisory committee, the committee's advice will be made public."

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